G.R. No. L-19152. February 29, 1964.
Tan Tiong Tick, petitioner, vs. Philippine Manufacturing Corporation (formerly Heng Tong Textile Co.), respondent.

FACTS

The respondent corporation, through its vice-president Ernesto Tan-Chi, sought to finance a textile importation by Lucilo Macaraig, who had the necessary license but lacked funds. Unfamiliar with Macaraig, the respondent issued a check for P20,000 dated March 21, 1951, payable to the petitioner, Tan Tiong Tick, a long-time friend and business associate of Tan-Chi. The petitioner endorsed and cashed the check, delivering the proceeds to Macaraig. Macaraig failed to deliver the textiles. In 1958, the respondent sued the petitioner to recover the P20,000.
The respondent’s theory was that the check was issued pursuant to an agreement whereby the petitioner, who knew Macaraig, assumed responsibility for the advanced amount in exchange for an equal share in the profits from the transaction. The petitioner contended he was merely a witness to the encashment and delivery of the cash to Macaraig, with no personal liability.

ISSUE

Whether the petitioner is liable to the respondent for the amount of the check based on the agreement that he assumed responsibility for the funds advanced to Macaraig.

RULING

Yes, the petitioner is liable. The Court affirmed the findings of the Court of Appeals, which upheld the trial court’s conclusion that the respondent’s version of the agreement was more credible. The legal logic rests on the evaluation of evidence and the petitioner’s conduct. The procedure of making the check payable to the petitioner for him to endorse and cash was deemed unnecessarily circuitous if his role was merely that of a witness. As an experienced businessman, the petitioner would have known that endorsing and cashing the check made him accountable to the drawer.
The Court found the petitioner’s alternative theory—that he was only a witness—untenable. The check itself showed he cashed it, and the respondent’s books consistently carried the amount as his indebtedness, with annual confirmation slips sent to him. The Court rejected new issues raised for the first time on appeal, such as the lack of corporate authorization or the claim the transaction was a void guaranty, as these were not raised in the lower courts. The absence of a written agreement for the P20,000 did not negate the promise, which was sufficiently proven by testimony and circumstances. The delay in filing suit did not create a presumption against the agreement, as the account was actively maintained in the corporate books. Therefore, the petitioner was correctly held liable for the amount.